6. Assumption MLR.5 (Homoskedasticity) Suppose you are interested in using the following multiple regression model to study the relationship between y and z1, Z2, I3, ..., Zį: y = Bo + Bizı + Bzz + B3Zs+..+z4 +u Though impossible to observe in reality, suppose you are able to gather a scatter plot of the variance of the error term, Var (u|22, z3, ...Zt), against the first explanatory variable z1, holding all other explanatory variables constant. This scatter plot is shown on the following graph: Note: Var (u | 71, 73, -.., zt) is denoted as Var (u]2) on the vertical axis of the graph. x1 True or False: Given the scatter plot, there is evidence to suggest the model suffers from heteroskedasticity. True O False (zn)mA

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6. Assumption MLR.5 (Homoskedasticity)
Suppose you are interested in using the following multiple regression model to study the relationship between y and I1, I2, I3, . .. , IĘ:
y = Bo+ B121+ B,I2 + B3¤3 +• · ·+IL +u
Though impossible to observe in reality, suppose you are able to gather a scatter plot of the variance of the error term, Var (u|r2, I3, ... „Zt),
against the first explanatory variable I1, holding all other explanatory variables constant. This scatter plot is shown on the following graph:
Note: Var (u| 12, I3, ..., Ik) is denoted as Var (u/z) on the vertical axis of the graph.
x1
True or False: Given the scatter plot, there is evidence to suggest the model suffers from heteroskedasticity.
True
O False
(zln)ieA
Transcribed Image Text:6. Assumption MLR.5 (Homoskedasticity) Suppose you are interested in using the following multiple regression model to study the relationship between y and I1, I2, I3, . .. , IĘ: y = Bo+ B121+ B,I2 + B3¤3 +• · ·+IL +u Though impossible to observe in reality, suppose you are able to gather a scatter plot of the variance of the error term, Var (u|r2, I3, ... „Zt), against the first explanatory variable I1, holding all other explanatory variables constant. This scatter plot is shown on the following graph: Note: Var (u| 12, I3, ..., Ik) is denoted as Var (u/z) on the vertical axis of the graph. x1 True or False: Given the scatter plot, there is evidence to suggest the model suffers from heteroskedasticity. True O False (zln)ieA
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